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It is hard to believe that Mahmoud Ahmadinejad has won the Iranian presidential election, given the reported widespread support for the reformist Mir Hossein Mousavi.

With the latter claiming vote rigging and intimidation by state institutions controlled by the incumbent, the Islamic republic faces a crisis of credibility.

The shortages of ballots, the shutting down of websites and text messaging on election day, the closing down of rival campaign headquarters after the vote and the clashes between the security forces and angry citizens lend credence to the charge that the election was stolen from Mousavi.

All this suggests that Barack Obama's plan to engage Iran might become that much more difficult. Yet engage he must.

After all, it was never going to be easy dealing with a country whose president questions the Holocaust, threatens to wipe out Israel, berates the Great Satan and boasts about Iran's nuclear advances (spooking both Israelis and Arabs alike).

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Yet it is also true that Ahmadinejad was never going to be central to a possible dialogue between Iran and the U.S.

He has been even more of a marginal figure than Iranian presidents usually are. Constitutionally, real power rests with the supreme leader, Ayatollah Syed Ali Khamenei.

The Iran-U.S. relationship never recovered from the 1979 Islamic revolution and the 444-day American hostage crisis that followed.

America's unconscionable support for Saddam Hussein's 1980-88 war on Iran and its debilitating economic sanctions on Iran failed to dent the regime in Tehran.

The invasion and occupation of Iraq strengthened Iran immeasurably – showering it with huge oil revenues; handing it a historic opportunity to consolidate its political and religious grip on Shiite Iraq; and so discrediting the U.S. military option that the Pentagon rejected the idea of bombing the Iranian nuclear installations.

Axing Bush's "axis of evil" lingo, he has been respectful of "the Islamic Republic of Iran," signalling that he's not after regime change.

In his Cairo speech, he acknowledged the 1953 CIA coup that toppled an elected Iranian government and reinstalled the Shah on the throne.

On the nuclear file, he conceded two key points: "Any nation, including Iran, should have the right to access peaceful nuclear power if it complies with its responsibilities under the nuclear Non-Proliferation Treaty."

And, "no single nation should pick and choose which nation holds nuclear weapons."

Except that America is trying to do exactly that with Iran. And U.S. allies Israel, India and Pakistan, all in Iran's neighbourhood, refuse to sign the non-proliferation treaty.

Those are the sorts of issues that Ayatollah Khamenei wants addressed.

Iran is a theocracy that, despite its tightly controlled democracy, is far more democratic than Saudi Arabia or Egypt, America's close allies.

Iran imposes strictures on women, yet they are more liberated than any Muslim women in the region and have been a leading force in the worldwide Islamic feminist movement.

While Arab regimes are pro-American and their peoples are not, the opposite is true in Iran. But Iranians will stand by their government, no matter how bad, if they feel their national interest is at stake.

Iran has never invaded a neighbour in modern times. It also opposed the Taliban long before the U.S. did. Recently, it responded to the U.S. call for help for Pakistan by pledging $300 million. It also sent ships off north Africa to curb Somali pirates.

The U.S. can do business with Iran, so long as it engages in a pragmatic give-and-take. What it cannot do is to try to dictate to Iran. That has been tried for the last 30 years – with zero success.

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